Roadblocks Have Been Cleared. Nothing To Stand In the Way. Trade Stocks That Are Breaking Out

May 14, 2013

The breakout is gathering steam in this light volume environment. Bears are not going to step in front of this freight train and Asset Managers are playing catch-up.

China’s economic releases were a little light and growth projections have been reduced from 7.8% to 7.6%. Their government is satisfied with the current growth level and they don’t have any stimulus plans. Europe’s industrial production was better than feared.

We are in risk on mode. Equities are attractive relative to bonds and the US dollar is strong. Stable economic conditions make the S&P 500 an attractive global investment.

European credit concerns will not spoil the party this year. EU officials support a centralized bank and they plan to move forward quickly.

Empire Manufacturing, initial claims and the Philly Fed will not stand in the way of this rally.

Earnings season is winding down and the results were decent. At a forward P/E of 15, stocks are still attractive. Asset Managers know that companies are running lean and mean and any uptick in demand will flow right to the bottom line.

The debt ceiling won’t be an issue until September and Republicans might extend it if progress towards a flat tax continues.

All of the potential roadblocks have been removed and this rally looks strong.

Focus on stocks that are breaking out and buy June calls. Exit when the momentum stalls and look for the next opportunity. I have a core call position and I am day trading. I was able to catch most of today’s move just after the open.

I still don’t like taking a lot of overnight risk. Not because I fear a big decline, but because I have been able to capture most of the moves intraday. I’m not rewarded for overnight positions and I don’t want to be exposed to time decay if the market stalls ahead of Memorial Day.

Ride the wave.
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